Oil Companies Investing in Production? Can't Have That

Oil companies have significantly increased investment in production, much to the dismay of our friends at Reuters.

The five largest fully publicly traded oil firms are spending more on finding and producing oil, but the industry is still handing back much of its windfall from record oil prices to investors.

Exxon Mobil Corp., Royal Dutch Shell Plc, BP Plc and two smaller rivals upped capital spending to $29 billion in the first quarter -- and spent $20.7 billion on dividends and stock buybacks.

Hello, Reuters? The word "investors" means people who provide money productively, i.e., fully expecting to get their investment plus a profit back. They are not "donators." They also tend to be owners. If you want donations toward oil exploration, why don't you lead the way, liquidate all your assets and donate it toward the effort?

Then Reuters shows its total ignorance about economics.

Oil companies are handing cash to investors because they plan their businesses at lower prices than today's.

No, oil companies are "handing cash to investors" because that's how investments work. You invest your money into a project at some risk, then if everything goes well, you get your money back plus a profit to pay you for the time value of your money, plus a profit for taking the risk. I know the concept of profit goes against your socialist leanings, but that is how the free market works.

Then Reuters thinks they know better how to run an oil company:

Oil firms are lifting spending after years of underinvestment and rising demand helped propel crude oil's rally from below $20 a barrel at the start of 2002 to a record $123.93 on Wednesday.

Excuse me? Underinvestment?!? According to you? Oil companies have poured billions into exploration, and Reuters contradicts themselves in the very next paragraph.

Shell invested $7.6 billion in the first quarter, more than larger rival Exxon.

You don't see Reuters criticizing their Communist hero Hugo Chavez for destroying the oil production of Venezuela. You don't see Reuters criticizing former KGB honcho and Communist Putin for confiscating assets in Russia and thus smothering oil field development in that country. But if an oil company pays dividend to an investor, there's Reuters running a story about it.

Somewhere, Uncle Joe Stalin smiling.